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Government not inclined to bear loan moratorium costs

Government not inclined to bear loan moratorium costs

Finance
The government is not inclined to bear the burden arising of the recent Supreme Court judgement on a blanket waiver of compound interest or interest on interest on all loan accounts which opted for moratorium during March-August 2020. "They (banks) are well-poised to handle this and we don't see any space for government relief," said a senior government official. The government has already compensated banks for the interest on interest they had lost on loans outstanding below Rs 2 crore. Analysts estimate the additional cost to reimburse banks for all loans at Rs 7,000-10,000 crore. "There is no directive from the court ordering the government to bear this cost," the government official said on the condition of anonymity. Since there is no deadline to refund the compound interest they hav...